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    Question

    In a time-series forecasting problem, if the seasonal indices for quarters 1, 2, and 3 are 0.80, 0.90, and 0.95 respectively. What can you say about the seasonal index of quarter 4?

    A It will be less than 1 Correct Answer Incorrect Answer
    B It will be greater than 1 Correct Answer Incorrect Answer
    C It will be equal to 1 Correct Answer Incorrect Answer
    D Seasonality does not exist Correct Answer Incorrect Answer
    E Data is insufficient Correct Answer Incorrect Answer

    Solution

    The seasonal indices must sum to 4, since there are 4 quarters. .80 + .90 + .95 = 2.65, so the seasonal index for the 4 th quarter must be 1.35 so B is the correct answer.

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